Doing Business Online in a Post-Brexit World
Through Rob van den Heuvel, Co-founder and CEO of Sendcloud, discusses the main fears of online retailers ahead of Brexit and tips to help online retailers prepare for the challenges and opportunities ahead.
Brexit is a bad word for aspirin. But among all the challenges and confusion, there is an opportunity to reap rewards.
The current trade and cooperation agreement between the EU and the UK provides for zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin.
While this is good news, it does not mean that you can continue to do business with the EU as you did before. The fact that the UK has left the Union unfortunately means that you can no longer escape customs.
From our own research, 42% of European online shoppers say one of the main reasons they don’t order from international stores is the potential additional costs associated with personalization.
This is proving to be a real headache for retailers and consumers. Stories are now emerging of customers being charged extra in tariffs and VAT, while some UK businesses are encouraged to set up in the EU to avoid further disruption.
To overcome this, it’s important to think about how you can tackle customs without disturbing your customers.
Responding to consumer fear is important, with clear communication implemented to explain exactly how you will help them avoid additional costs. Large companies might indeed consider setting up a manufacturing base or sales entity within the EU to mitigate some of these controls. For smaller retailers, automating custom forms to ensure orders can be shipped seamlessly to the EU might be a better solution in the short term.
Doing business under the Brexit deal
Enough about the deal and customs fears – what does this mean in practice? With the new tariff free trade agreement, there will be no tariffs or newly imposed duties. However, after Brexit, all UK businesses will have to claim preferential tariffs and ensure the correct procedures are in place for dealing with customs.
First of all, to qualify for the zero tariff, quota free trade agreement, you will need to prove that your products originate, are manufactured or have been sufficiently worked in the UK. If your products meet the requirements, you will need to attach a “declaration of origin” to all your shipments.
When exporting from the EU to the UK, an origin declaration can be made by any exporter with a consignment value of € 6,000 (currently £ 5,700) or less. Above this amount, the EU exporter must have a Registered Exporter Number (REX) and include it in the declaration.
In addition to that, you will need the correct documents for your goods to pass customs in Europe. It is essential to have a EORI number in order to transport goods between Great Britain and the EU. If you don’t have an EORI, you may have increased costs and delays. On top of that, you need to add a commercial invoice when delivering products from EU to UK, as well as a CN22 or CN23 depending on the carrier you use. Don’t forget to think about local VAT and tariff policies as well, because nasty surprises are never fun.
Automation is the key
Automation simplifies this process for retailers. For example, automated shipping providers allow businesses to electronically send customs documents, eliminating the need to print and physically attach forms to shipments, with customs documents automatically transmitted digitally to the carrier.
You can also automate your process by using a shipping platform which will allow flexibility as you will not be tied to a specific carrier which can be beneficial especially when shipping to different countries. It may be better to use DPD for European countries, while DHL Express may be more efficient when shipping to USA.
Running international businesses shouldn’t cost the Earth dearly
Online retailers need to act as early as possible and not leave things to chance. Now is the time to solidify plans for what is to come in the coming months, as the ripple effects are likely to rumble in the years to come.
Taking proactive steps to prepare for a post-Brexit e-commerce industry can help minimize any disruption, manage the impact, and even gain a competitive advantage over those caught off guard.